Salvadoran textile companies state that the costs of labor, security and delivery times have made the sector's operations more expensive.
The recentincrease in the minimum wageis one of the factors that has had a direct impact on the cost structure of Salvadoran textile companies. Added to this are logistical difficulties in customs offices, which have caused companies from neighboring countries to obtain contracts that were originally planned for El Salvador.
The Salvadoran union has stated that excessive bureaucracy and high production costs are the main factors that could be encouraging some textile mills to reduce operations in the country.
José Antonio Escobar, president of the Chamber of the Textile Industry, Clothing and Free Zones of El Salvador (Camtex) told Elsalvador.com that one of the companies that has shut down part of its operations, to transfer them to another country, is Fruit of the Loom.Escobar said"...'In the plant owned by Fruit of the Loom in the industrial park American Park, where a thousand people work, the company will make a reduction of about 850 positions'."
The textile sector claims that the high cost of electricity in the country has become a limiting factor to foreign investment.
The union of textile companies states that more foreign investment could reach the industry if the cost of electricity was not so high.According to Dean Garcia, executive director of the Nicaraguan Association of the Textile and Apparel Industry (Anitec),"... there could be benefits from the entry of textile companies and spinning mills setting up in Nicaragua and producing sufficient raw material for the industry that already exists in the country. "
A report by the Business Intelligence Unit at CentralAmericaData.com notes that in 2015 Central American countries imported $318 million worth of yarns, filaments and textiles, led by El Salvador with $157 million.
El Salvador was the main importer of synthetic filaments, strips and materials similar to synthetic textiles last year, according to data on the Textiles and Raw Materials Market compiled by the Business Intelligence Unit at CentralAmericaData.com.
Textile exports in the year exceeded $2.5 billion, an increase of 6% compared to 2014.
From a report by the Chamber of Textile Industry, Clothing and Free Zones of El Salvador:
The growth of exports in the sector in 2015 amounted to $149 million more exports compared to 2014 ($2,403,000), positioning itself as the most important sector in exports with $2,552 exported, accounting for 46% of the country's total exports.
80% of the volume exported by the Honduran maquila sector in the first half of 2014 corresponds to textiles, 15% to harnesses, and the remaining 5% to other goods.
A report by the Central Bank of Honduras (BCH) specifies that when comparing the figure for the first half of this year with the same period of 2013, "... A slight increase of $8.2 million is observed. "
In 2011 the country imported $251 million worth of clothes, an increase of 12% compared to the previous year.
Examples of some of the data in the report:
Imports of men and childrens shirts increased by 46% between 2010 and 2011, going from $18.1 million to $26.5 million imported in 2011.
Meanwhile, imports of suits, ensembles, jackets (coats), dresses, skirts, skirt-shorts,trousers, breeches, and shorts, and shorts for women and girls increased by 13% between 2010 and 2011, and represented the largest increase in monetary level, going from $66 million to $74.7 million imported in 2011.
The U.S. company Millknit Industries is to produce fabrics for the maquiladora industry, beginning operations in the first quarter of 2013.
Operating in the industrial park Las Mercedes, the textile company will begin operations between January and February 2013, informed the technical secretary of the National Commission of Free Zones (CNZF), Alvaro Baltodano.
The South Korean textile company Hansae Nicaragua S.A will be investing between 2011 and 2013 in order to expand its industrial park situated in Masaya.
The works for expanding the industrial plant by 60,000 square foot will be carried out in two stages, with the first stage starting in December.
The president of the Nicaraguan Chamber of Construction, CNC, Mario Zelaya, told Elnuevodiario.com.ni, "The project will start with 30 million square feet first and then with the other 30 thousand in 2013. It will involve a total investment of $25 million. The first phase will involve $15 million and the second $10 million. The contract has already been signed."